Donna Tse has recently accepted the position of assistant manager at Cycle World, a bicycle store in St. Louis. She has just finished her accounting courses. Cycle World's manager and owner, Jeff Towry, asks Tse to prepare a budgeted income statement for 2015 based on the information he has collected. Tse's budget follows:

Tse does not want to give Towry this budget without making constructive suggestions for steps Towry could take to improve expected performance.

Assume the role of Donna Tse. Write a memo to Towry outlining yoursuggestions.

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CYCLE WORLD Budgeted Income Statement For the Year Ended July 31, 2015 Sales Revenue Cost of Goods Sdld Gross Proft Selling and Administrative Expenses: $ 244,000 177,000 67,000 Salaries and Commissions Expense Rent Expense Depreciation Expense Insurance Expense Miscellaneous Expens $46,000 8,000 2,000 800 12,000 Operating Loss Interest Expense Net Loss 68,800 1,800) (225) S (2,025